should pass the exact line of their power, it would rather belong to the government of Pennsylvania to exact a forfeiture of their charter, than for this court in this collateral way to. decide a question of misuser, by setting aside a just and bona fide contract." This case has been generally followed.5

4

7

8

If this is true where the corporation is absolutely forbidden to take property, a fortiori when the prohibition is only partial the State of charter alone can enforce it. Frequently a charter will contain permission to hold a certain amount of real estate, or to a fixed annual value, or for prescribed purposes, commonly, such as is necessary for the transaction of the business of the corporation. The natural implication might seem to be that no power is conferred to hold otherwise than so provided. No objection, however, to the holding of land by the corporation to a greater value or for another purpose can be made collaterally, or by any person not acting for the State. In Cowell v. Springs Co.10 the Supreme Court of the United

This was quoted though somewhat doubtfully by Mr. Justice Swayne in Nat. Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188. A statute of the United States prescribes the purposes for which a national bank may hold real estate "A national bank may purchase, hold and convey real estate for the following purposes and for no others." It was assumed that the transaction was included within none of the prescribed purposes; yet the security-a deed of trust with power of sale-was held valid, since the act provided other penalties. Fowler v. Scully, 72 Pa. 456, 13 A. R. 699, a contrary decision on the same point, must be regarded no longer sound. 5 United States Mtg. Co. v. Sperry, 24 Fed. 838; O'Brien v. Wetherell, 14 Kan. 616, 621; Myers v. McGavock, 39 Neb. 843, 58 N. W. 522, 42 A. S. R. 627; Watts v. Gantt, 42 Neb. 869, 61 N. W. 104; Lancaster v. Amsterdam Improvement Co., 140 N. Y. 576, 35 N. E. 964, 24 L. R. A. 322. • Whitman Mining Co. v. Baker, 3 Nev. 386; Amer. Mtg. Co. v. Tennille, 87 Ga. 28, 13 S. E. 158, 12 L. R. A. 529.

7 Jones v. Habersham, 107 U. S. 174, 27 L. ed. 401.

8 Russell v. Topping, 5 McLean, 194, Fed. Cas. No. 12,163.

Jones v. Habersham, 107 U. S. 174, 27 L. ed. 401; Natoma Water & Mining Co. v. Clarkin, 14 Cal. 544; American Mtg. Co. v. Tennille, 87 Ga. 28, 13 S. E. 158, 12 L. R. A. 529; Hough v. Cook Co. Land Co., 73 Ill. 23, 24 A. R. 230; Alexander v. Tolleston Club, 110 Ill. 65; Barnes v. Suddard, 117 Ill. 237, 7 N. E. 477; Chicago, B. & Q. R. R. v. Lewis, 53 Ia. 101, 4 N. W. 842; Taylor v. Trust Co., 71 Miss. 694.

10 100 U. S. 55, 25 L. ed. 547.

States said: "Whether the particular premises in controversy are necessary for that business is not important; that is a matter between the government of the State and the corporation, and is no concern of the defendant. It would create great inconveniences and embarrassments if, in actions by corporations to recover the possession of their real property, an investigation was permitted into the necessity of such property for the purposes of their incorporation and their title made to rest upon proof of that necessity."

This doctrine appears to have been neglected in an early case in Illinois. The charter of a foreign corporation provided that all conveyances of land should be executed to it in the name of one of its officers. It was held that a conveyance of land to it in its corporate name was absolutely void.11 The effect of this decision is probably modified by subsequent decisions which will be considered later.

$223. Prohibition by the State of situs.

While the power of the corporation to take and hold property must be derived from its charter, it can acquire property only in accordance with the law of the situs of the property. It is, therefore, possible for the State where land is situated to forbid the holding of land by a foreign corporation. The common law, indeed, permits the holding, unless perhaps in a case where it is regarded as against public policy for the corporation to hold land; and as has been seen the fact that no domestic corporation is empowered to hold land, or to acquire it for certain purposes, does not of itself indicate such a public policy on the subject that the court without the aid of a statute can declare the holding illegal.12 It has, however, been held in Pennsylvania that a foreign corporation permitted. by the laws of its charter State to lease non-connecting lines, will not in Pennsylvania be allowed to do so in the absence

11 Metropolitan Bank v. Godfrey, 23 Ill. 579.

12 Ante, § 113.

of a Pennsylvania statute allowing it to domestic corporations, 13

If a State desires to restrain foreign corporations from taking or holding land it must do so by statute. Its power to accomplish this purpose by statute is, generally speaking, unlimited; though the right of a State to prohibit the holding of land by a foreign corporation may be restrained by the Constitution of the United States. 14 The same result may be reached in the case of a foreign country by a treaty. Thus the treaty between this country and England prevented the forfeiture of land in this country held by English corporations. 15

Statutes are sometimes passed limiting the powers of a foreign corporation to take land; or, more frequently, defining the purposes for which it may take land. Thus, express permission may be given by statute to hold so much as may be necessary for business purposes; or so much as similar domestic corporations can hold. When there is such a restriction upon the right of the corporation to hold land, the State alone can object if the corporation exceeds its right; and even if all foreign corporations are forbidden to take land, the only remedy is an action by the State. Private individuals, whether claiming under the corporation's grantor or otherwise, cannot object.16 This is even clearer than the case of limitation in the charter upon the right to take property; for in this case there can be no question of the power of the corporation to acquire the property, and the only obstacle to its holding the land lies in the action of the State.

13 Van Steuben v. Cent. R. R. of N. J., 178 Pa. 367, 35 Atl. 992, 34 L. R. A. 577.

14 Ante, Chapter VI.

15 Society for the Propagation of the Gospel v. New Haven, 8 Wheat. 464, 5 L. ed. 662.

16 Seymour v. Slide & Spur Gold Mines, 153 U. S. 523, 38 L. ed. 807; Carlow v. Aultman, 28 Neb. 672, 44 N. W. 873; Whitman Mining Co. v. Baker, 3 Nev. 386; People v. Mauran, 5 Denio (N. Y.), 389; Leazure v. Hillegas, 7 S. & R. (Pa.) 313; Baird v. Washington, 11 S. & R. (Pa.) 411; Galveston Land, etc., Co. v. Perkins, (Tex. Civ. App.) 26 S. W. 256.

But where a foreign corporation holding land in compliance with such permission attempts to dispose of it for a purpose contrary to the public policy of the State, a bill will lie by a resident stockholder to restrain such sale.17

The question has received more attention in Illinois than in any other State. The first decision was Carroll v. East St. Louis.18 This was an action of ejectment and the city claimed under a deed from the Connecticut Land Company, a corporation of Connecticut formed for the purpose of dealing in land. The court decided that it was contrary to the public policy of the State to allow lands to be held by such a corporation, and that the corporation took no title and could convey none to the city. This decision was followed in Starkweather v. American Bible Society,19 where the court declared void a devise to a foreign religious corporation; also in United States Trust Co. v. Lee, 20 which decided that a foreign corporation could not take as trustee under a will. But in later decisions 21 the court has rather receded from the position taken in these last two cases, and now probably Carroll v. East St. Louis would be construed strictly to mean merely that comity forbids a foreign corporation formed for the express purpose of dealing in land to hold tracts as a speculative investment, and that otherwise foreign corporations may, by comity, hold real estate as authorized by their charters.22

The constitution of Nebraska declares, "No railway corporation organized under the laws of any other State, or of the United States, and doing business in this State, shall be entitled to exercise the right of eminent domain . . . until it shall have become a body corporate pursuant to and in accordance with the laws of this State." Under this provision

17 Harding v. Am. Glucose Co., 182 Ill. 551, 55 N. E. 577, 74 A. S. R. 189. 18 67 Ill. 568, 16 A. R. 632.

19 72 Ill. 50, 22 A. R. 133.

20 73 Ill. 142, 24 A. R. 236.

21 Stevens v. Pratt, 101 Ill. 206; Commercial U. Ins. Co. v. Scammon, 102 Ill. 46; Santa Clara Female Academy v. Sullivan, 116 Ill. 375, 6 N. E. 183. 22 Christian Union v. Yount, 101 U. S. 352, 25 L. ed. 888.

the court held that the Chicago, Burlington & Quincy Railway, a foreign corporation, could not take as lessee.23 "It cannot do by indirection what it is absolutely prohibited from doing directly." With a similar state of facts, the directly contrary conclusion was reached in Iowa.24 There a foreign corporation organized a domestic corporation out of its own stockholders for the express purpose of condemning a right of way for the foreign corporation. This was held to be legal. The question in each case was the interpretation of the domestic Constitution and a declaration of the public policy of the State; and it is not surprising that a difference of opinion should exist. But since in each case the title to the land is in a domestic corporation, and therefore under the complete control of the State, the policy of the Constitution seems not to be violated, and the Iowa decision is preferable.

One or two decisions which are more or less opposed to the great current of authority require notice. Thus where the State Bank of Illinois was given power in its charter to hold land for specified purposes, and forbidden to purchase, hold or convey, land in any other case or for any other purpose, it was held that the conveyance to the bank of land for another purpose was void and passed no title.25 And in one case the Supreme Court of the United States refused to assist a corporation in gaining possession of land fraudulently appropriated by its officers, it appearing that the corporation had no power to hold for such purposes. 26 The doctrine of this case is a

23 State v. Scott, 22 Neb. 628, 36 N. W. 121. See Ogden v. Murray, 39 N. Y. 202; Koenig v. Chicago, B. & Q. R. R., 27 Neb. 699, 43 N. W. 423. 24 Lower v. Chicago, B. & Q. Ry., 59 Ia. 563, 13 N. W. 718. 25 Russell v. Topping, 5 McLean, 194, Fed. Cas. No. 12,163.

26 Case v. Kelley, 133 U. S. 21, 33 L. ed. 513. Miller, J., said: "The question here is, not whether the courts would deprive it of such lands if they had been conveyed to it, but whether they will aid it to violate the law and obtain a title which it has no power to hold. We think the questions are very different ones, and that while a court might hesitate to declare the title to lands received already, and in their possession and ownership void, on the principle that they had no authority to take such lands, it is very clear that it will not make itself the active agent in behalf of the company